What is an ICO?

ICO, or “ Initial Coin Offering”, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin, ether, or “fiat” (real money e.g USD, EUR, etc.). A stake of the company is sold via a crowdfunding campaign that is open to the public.

When a cryptocurrency startup company wants to raise money through an ICO, it creates a plan on a “whitepaper “ which determines the technology of a blockchain project. It contains a detailed description of the system and its interaction with users – states what the project is about, what needs the project will fulfil upon completion, current market data and growth anticipations, amount of money  needed to undertake the project ,  a list of project team members, investors and advisors , what type of money is accepted, and how long the ICO campaign will run for.

The first token sale (ICO) was held by Mastercoin in July 2013. Ethereum raised money with a token sale in 2014, raising 3,700 BTC in its first 12 hours, equal to approximately $2.3 million dollars at the time.

ICO stages

  • Pre-announcement – announcement of a future project , a small presentation to investors that contains an executive summary of the project, goals, features of the project and team members. Usually it’s made on a popular cryptocurrency forums like Bitcointalk,Reddit, etc.
  • Offer – covers all the nuances of the project, specifies the desired amount of investments, deadline of the ICO and all the rights that the token possesses.
  • Marketing campaign – the campaign usually lasts up to a month and specialized agencies may be hired to present at various conferences, with the target audience for crowdfunding being institutional and smaller investors. After the end of the marketing campaign, the process of selling and buying tokens begins and the company provides investors a way to buy the tokens alleged by the offer.
  • Token sale – Depending on the start-up strategy, tokens are distributed and free for trading or released after a product was initiated in order to ensure a return on investment for ICO participants. 

How to participate in an ICO

  • Obtain Ether – Most crowdsales have been running on top of the Ethereum network, so obtaining some ether is your best choice. Bitcoin and some other alt-coins may also be accepted.
  • Keep your ETH in a personal wallet – The most user-friendly and widely accepted Ethereum wallets are MetaMask and MyEhterWallet. Do not use Exchange wallets as they are risky and don’t work well when participating in ICO.
  • Register for the ICO – to do this you will need to enter your public wallet address along with other information. Bookmark the official website of the ICO (the website usually contains step-by-step instructions on how to participate), subscribe to a newsletter or mailing list and join the Slack or Telegram group (contains plenty of  information and discussions) .
  • Double check the details and smart contract address – make sure you know the details of the ICO such as: date, time and terms of the ICO, as well as the conversion rates of the tokens.

However, the most important thing is to know the correct smart contract address of the ICO.

  • Send your ETH to the right address – When the token sale starts, you will need to send ETH to the smart contract address and set a proper “Gas” limit. Amount of “Gas” corresponds to the complexity of a transaction. Higher “Gas” price ensures that your block is given higher priority by miners.
  • Wait for your tokens to be released – when the funding target is reached, the ICO’s tokens will be sent to your personal wallet.


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